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Queensland Budget faithfully delivers on election commitments but draws down on wealth of future generations

QEAS's special Queensland Budget 2018-19 Business Update can be found here

Queensland State Budget 2018-19 Preview – The Smiling Gods of Revenue

As the foremost instrument of both fiscal and economic management all eyes will be on the State Budget next week.

On Tuesday 12th June the Hon Jackie Trad, Treasurer, will be delivering her first State Budget and will no doubt be using this as an opportunity to demonstrate that Queensland can count on her as custodian of the State's finances.  Queensland's budgetary position should in theory be in pretty good shape delivering a higher than anticipated surplus for 2017-18 and potentially a faster pay down in debt across the forward estimates. Both can and should be delivered courtesy of higher than forecast:

  • Coking coal prices and export volumes;
  • Employment growth and the beneficial impact this has had on payroll tax receipts (albeit partly tempered by low wages growth);
  • Population growth delivering boosted tax revenue in other areas namely duties; and also
  • Four new ‘Robin Hood’ taxes and a waste levy that will kick off in 2018-19.  

The below are the criteria that can be used to objectively assess how good the State Budget is for Queenslanders on Tuesday 12 June 2018:

  1. What is the revised surplus for 2017-18?   Is it in line with the December MYFER estimate of $485 million for 2017-18. It is almost certainly going to be higher than that thanks to the good revenue fortune as referenced above. 
  2. What are the surpluses for 2018-19 and across the forward estimates?  I do not think we will see these rise significantly as excess monies will be channelled either into higher infrastructure spend, recurrent expenditure and/or earlier pay down of debt. The only threats I can immediately see to revenue across the forward estimates are the spat over Aurizon and the impact it may have on coal royalties (this is overstated: worth $213 million and in any case is more than made up by coal prices and volumes at present) and the current review of GST carve-up arrangements which is considerably more serious and could be worth between $700 million and $1.4 billion for 2019-20 and beyond.
  3. What is the revised level of taxation and other receipts for 2017-18 and 2018-19?  Expect windfalls and large ones at that.  For example between the June 2017 State Budget last year and the MYFER in December royalty revenue was revised upwards by $806 million across the period 2017-18 to 2020-21. It will be interesting to see how much additional revenue is received in other areas (eg payroll tax and land tax). We will also start to see commencement of the State Government’s new ‘robin hood’ taxes including the 7% transfer duty surcharge applied to foreign buyers of Queensland property (raising $99m over 3 years) and a new land tax category for 850 large property holdings greater than $10m (raising $227m over 3 years).  Furthermore the new ‘waste levy’ details and anticipated revenue will be included in the State Budget and is anticipated to kick-off 1 January. Tax revenue in the MYFER was forecast to increase by 3.0% in 2017-18 and 6.7% in 2018-19.
  4. How much is Government expenditure growing by in 2017-18 and 2018-19 and have they kept a lid on growth?  A one per cent reprioritisation measure in the public service saving $1 billion was announced during the State Election.  Expenditure in the MYFER was forecast to grow by 4.9% in 2017-18 and by 0.2% in 2018-19.  Employee related expenses are forecast to grow by 6.6% in 2017-18 and by 2.9% in 2018-19.  Public service numbers and forecasted headcount are also contained in the State Budget and it will be prudent to check these against population growth of 1.5% in 2017-18 and 1.75% in 2018-19.  I would not be surprised to see the sixth fiscal principle which caps public service growth to population growth jettisoned as is has repeatedly not been met.
  5. What is the budget repair across the forward estimates?  As part of the election, Queensland Labor announced a total net budget repair of $261 million over the forward estimates.  Election commitments totalled $2.8 billion and total budget repair measures of $3.0 billion in recurrent expenditure savings, tax increases and capital reprioritisation measures were announced.  It will be time to cross reference these. Generally speaking there is risk associated with the 'repair as what we spend is guaranteed but what we earn is not.
  6. Is government debt rising or falling in 2018-19 and over the forward estimates of the Budget? For example in the MYFER public sector borrowings in 2017-18 were anticipated to be $71.222 billion  and by 2020-21 debt will have increased to $80.843 billion.  I am expecting to see some insight into how the Treasurer is going to tackle the issue of ‘Debt’ and whether she has resolve to get our triple A credit rating back some time soon.
  7. What are the economic and revenue forecasts for the next four financial years and are they realistic? In the MYFER Queensland's economy was forecast to grow by 2.75% in 2017-18, employment by 2.25% and an unemployment rate at 6.0%.  For 2018-19 GSP is forecast to grow by 3%, employment by 1.5% and an unemployment rate of 6%.  Queensland Labor will use this State Budget as an opportunity to press home their economic credentials but it comes at a time when the trend unemployment rate is now starting to rise again.
  8. What infrastructure projects will be announced? We have already seen widespread announcements to boost infrastructure spend to $45 billion over the next four years from 2018-19.  Infrastructure spend for 2017-18 was estimated at just $7.9 billion.  Recent announcements indicate this will increase to $11.5 billion in 2018-19, $11.6 billion in 2019-20, $11.3 billion in 2020-21 and $10.6 billion in 2021-22.  What are the projects that will be committed to?
  9. What economic and job growth initiatives will be announced?  It is almost certain we will not see any new announcements but rather the rearticulation of the initiatives announced over the course of the State election campaign.  However the unexpected recent peak in Queensland’s employment and an increase in the unemployment rate may serve as impetus to reinforce measures in this area.
  10. Are there any items from left field? It’s a safe bet we will not see any asset sales on the agenda but are there any other creative accounting practices that were readily apparent under the previous Treasurer’s watch? I don’t see Jackie Trad needing to go down this dubious pathway.

The ‘inflows’ of the State Budget for 2017-18 and 2018-19 will not get much better than this and with the 'Gods of revenue' smiling upon her at present the new Treasurer will be hoping to put her best foot forward in demonstrating capable and competent fiscal and economic leadership. 

Queensland Small Business Week 2018: QEAS Business Plan Template

I have previously penned why we need to celebrate the importance of Queensland Small Businesses and Monday 28 May 2018 marks the start of Queensland's Small Business Week 2018.  To mark this occasion QEAS has prepared a resource to assist small businesses to be able to plan better.

Small businesses in Queensland have the lowest survival rate in Australia and they also have the lowest incidence of use of key performance indicators to measure and improve their progress.  Accordingly this week I spent a bit of time refining QEAS's business plan template (word doc) that can be used by Queensland small businesses without any strings attached.

Business plans are central to expansion, competitiveness and are a proven prerequisite in accessing finance.  QEAS hopes this resource gives a number of Queensland's small businesses a greater control of their future.

 

 

Trends in Queensland’s Tax, Royalties and GOC Dividends Fact Sheet

With the State Budget just around the corner I wanted to pen a quick analysis of trends in state taxation receipts and other own source revenue including royalties and GOC dividends.

Based on the analysis of eighteen Queensland State Budgets between 2000-01 and 2017-18 key observations include:

  • Queensland's annual own source revenue increased by $12,642 million or 192 per cent;
  • The top three revenue sources in 2017-18 are royalties ($3,861 million), payroll tax ($3,818 million) and transfer duties ($3,190 million);
  • The three revenue sources that have grown the most in dollar terms between 2000-01 and 2017-18 are royalties ($3,230 million), payroll tax tax ($2,648 million) and transfer duties ($2,490 million);
  • The three revenue sources that have grown the most in percentage terms between 2000-01 and 2017-18 are royalties (512%), land tax (418%) and transfer duties (356%);

I have provided below some other relevant metrics to contrast the above percentage increases over the same period of time:

  • State Budget expenditure has grown by 182.3 per cent;
  • GSP in nominal terms over this period has grown by 195.6 per cent;
  • Inflation has increased by 56.4 per cent; and
  • Queensland population has increased by 40.1 per cent.

Two areas that I would caution interpretation on is GOC dividends and tax equivalent payments as the Bligh Government in 2009 privatised Forestry Qld, Port of Brisbane, Queensland Motorways, Abbott Point Coal Terminal and Queensland Rail’s coal transport business.  This has meant that dividends and tax equivalent payments post 2009-10 are now earned off a smaller base than they were in 2001-02 for example.  It also excludes one-off and special withdrawals of capital that for example occurred in 2015 under the former Treasurer Curtis Pitt.

Jobs and key infrastructure projects falling by the wayside

Much of the work QEAS does is behind the scenes for individual clients. It is great to see some this work underpin recent advocacy by Master Builders Queensland in the public domain.  Their media release is below together with links to the QEAS research.

HOSPITALS, schools and thousands of jobs – that’s what Queensland is missing out on.

The findings come from new research commissioned by Master Builders. The report, Establishing a Queensland Government Benchmark for Building and Construction Infrastructure Spending, was prepared by Queensland Economic Advocacy Solutions.

In the wake of the research, and with the 2018-19 Queensland Budget looming, Master Builders is urging government not to leave Queenslanders out in the cold again.

“In the last seven years, state government spending on public sector building and construction has decreased from $11 billion to $6 billion,” Master Builders Deputy CEO, Paul Bidwell said.

“The current level of public sector building and construction expenditure is at an historic low, stagnating at 1.8 per cent of Gross State Product (GSP).

“As a result, we’re losing the workers our Queensland builders have heavily invested in, because they have to follow the work and head interstate.

“That’s why in our recent budget submission we’ve asked the State Government to establish a Public Sector Building and Construction Capital Expenditure Benchmark. We’ve recommended that the benchmark be set at the 25-year average, which is 2.7 per cent of GSP. This needs to be an ongoing standard for the government’s investment in public sector building and construction.

“If we were to reach this benchmark, the additional government investment would mean an extra 26,000 Queensland jobs and desperately needed infrastructure.”

To meet this benchmark, the State Government needs to commit to spending a further $2.9 billion, on top of the $6 billion that was allocated for public sector building and construction in the 2017-18 State budget.

“We’re recommending that $1.3 billion of this additional funding should be earmarked for public sector residential and non-residential buildings; things like hospitals, schools and social housing.”

Queensland desperately needs these and we’ve been missing out.

Key industry stakeholders, like the Civil Contractors Federation Queensland (CCF Qld), support the view that State Government spending on public sector building and construction is well below what is needed for Queensland.

“Like Master Builders, we’ve been advocating for years that the level of State Government spending on infrastructure has been well below historical benchmark levels of percentage of Gross State Product. This report confirms this and we fully support its findings,” CCF Qld CEO, Damian Long said.

Master Builders’ research also confirms that the state government has been underspending its annual capital expenditure budget.

“Over the past three years alone, on average only 84 per cent of the state government’s allocated budget for public sector building and construction, was actually spent,” Mr Bidwell explained.

“This meant $4.3 billion fell by the wayside, which on average would have created an extra 13,000 jobs for Queenslanders each year.

Here’s the additional jobs that would be created in each region if the Queensland Government committed to increasing funding for public sector building and construction to the 25-year average. And there are thousands more jobs that would be created if the government simply spent the full amount allocated in the budget.

Master Builders has developed a comprehensive infographic to explain what we are asking the Queensland Government to deliver in the 2018-19 State Budget.

If Queensland wants its long-term wages growth back we need an unemployment rate of 5.0%

The ABS today confirmed that wages growth in Queensland remains stubbornly and well short of the long-term average of 3.3 per cent. Queensland’s Wage Price Index grew by 2.2 per cent over the past twelve months and compares to a national rate of 2.1 per cent.

The factors that are causing slow wages growth are easing but continue to exist namely below-average economic growth; spare capacity in the labour market; low inflation; and lower output price rises due to greater competition.  More specifically:

  • Queensland’s domestic economy is now showing signs of good growth but continues to remain below trend rates;
  • There has been lower inflation and employees have focused more on the purchasing power of their wages in terms of the goods and services they can buy rather than the dollar quantum (i.e. they are concerned about their real as opposed to nominal wages).  Inflation is now only starting to rise;
  • Business output prices are also influencing wages.  With significant import competition and fierce domestic competition to attract and retain customers output prices have also been historically low.  This absence of growth in prices has imposed a major constraint on the capacity of employers to pay higher wages.  This constraint remains firmly in place; and
  • The extent of underemployment is starting to improve with working hours increasing in Queensland but plenty of progress is needed.  Workers have been after more hours of employment (underemployed) preferring to take them rather than a pay rise. Firms have been giving more hours to existing workers without needing a pay rise to entice or retain them. 

None of these constraints have left the State but each of them has eased slightly to give capacity for wages to lift fractionally but they remain over one per cent below their long-term trend. Queensland has now moved beyond the lowest wages growth in recent memory but progress will be painfully slow for some. 

This is a really important issue as wages growth is one of the main determinants of living standards for workers as they represent the largest source of household income.  It also impacts on household consumption and spend across the broader economy.

The degree to how much wages will rise in the future is a function of how much domestic economic growth can place demand on labour that in turn fuels wage pressures.

The Wage Phillips Curve that describes the inverse relationship between demand for labour (as measured by the unemployment rate) and wages growth in Queensland was once a good guide.  However over the past several years wage outcomes have totally detached themselves from the curve.  They are now only starting to come back towards the historical relationship that economists think should exist.

Provided this trend continues then we can reasonably conclude that if Queensland wants its wages growth back up over 3.3 per cent (the long-term average) then we need to reduce our State’s unemployment rate to between 5.0 and 5.5 per cent.

 

Federal Budget 2018-19: Queensland Update

For a full analysis of the Federal Budget 2018-19 and what it means for Queensland please click here

One in three recommendations either partly or wholly rejected by the State Gov for the Manufacturing Sector

Yesterday (1st May 2018) the State Government responded to a series of recommendations made by the Queensland Productivity Commission (QPC) on how to secure the future of the State’s manufacturing sector. Out of 17 very good recommendations made by the QPC the State Government accepted in whole five, accepted another six in principle, partly rejected five and outright rejected one.

I will succinctly summarise the Inquiry's findings through my own 'cut and paste' exercise from the QPC Report.

In September 2016, the Queensland Government asked the Queensland Productivity Commission to conduct an inquiry into manufacturing to identify policies to improve the sector’s productivity and competitiveness.

Manufacturing in Queensland generates around $20 billion a year in gross value added for the Queensland economy. It employs 168,000 workers in 16,400 businesses.

The sector faces significant pressures:

  • High input costs  particularly energy and labour;
  • Electricity prices have increased by 4.9 per cent each year on average, between 1998–99 and 2016–17;
  • Difficulties maintaining workforce size and quality;
  • Strong domestic and international competition; and
  • Changing consumption trends and new production technologies.

Although manufacturing is declining as a share of economic activity, it is a strong and diverse sector in Queensland, with a prosperous future if and with:

  • Leading-edge technology;
  • Targeting niche markets, producing unique or customised products;
  • Responding to fast changes in preferences by shortening the lead time from factory to retailer and customer;
  • Using innovation to drive quality and efficiency;
  • Bundling manufactured goods with services such as maintenance, financing, distribution and insurance, to add value for the customer; and
  • Leveraging their proximity to key raw materials and other comparative advantages.

There is no magic bullet in terms of policy levers for the Queensland Government as many of the underlying issues are outside the influence of government.

The QPC proposes a Manufacturing: Policy Action Plan, built on broad-based policy reform—to address cost pressures, increase productivity and improve government programs—and supported by effective implementation.  Key actions are provided in this slide:

So what has been the State Government response:

The State Government accepted in whole five recommendations (2, 4, 6, 7 and 12) which relate to better management skills; innovation tracking; improving VET skills; and opening up gas exploration.

The State Government accepted in principle six recommendations (5, 8, 9, 10, 11 and 17) which relate to consolidating innovation programs; regulation stocktakes for certain industry sectors; a stocktake of who has received industry assistance and what it achieved; assisting with structural adjustment through training; ensuring electricity market efficiency to drive down prices; and Ministerial responsibility for the Manufacturing: Policy Action Plan.

The State Government rejected in part five recommendations (1, 3, 13, 14 and 15) which relate to industry assistance loans instead of grants; innovation programs should be targeted at all businesses instead of specific segments; delivering best price / quality outcome in government procurement; greater transparency around benefits of Trade and Investment QLD; and industry assistance should not be targeted at individual firms or projects.

Only one recommendation was rejected wholly by the State Government (rec 16) which involves reforming the state’s tax framework. The Government agreed that tax efficiency, equity and simplicity are important aspects of the taxation framework, however it is not prepared to go it alone without a national process to achieve holistic tax reform.

In summary, the State Government have in effect rejected in part or outright one in every three recommendations made by the QPC. The significant gap between the QPC’s recommendations and the State Government’s response really highlights the ideological divide that exists between QPC’s 'economic rationalist' or 'freer market' approach and the State Government’s more ‘mixed’ and 'interventionist' approach.

I guess this is to be expected but I believe this Inquiry has fallen well short of what could have been achieved despite the excellent work conducted by the QPC.  Again to my mind, it shows up the QPC as not having a clear purpose at present under this Government which I discuss here. 

Finally it has also been a curious exercise in the first place as many of the policies or initiatives cited by the State Government in their response have already been delivered or are underway.  It kind of raises the question of why have the Inquiry in the first place if the solutions provided were prepared well ahead of the Inquiry reaching completion.

The final QPC report can be found here and the Government Response can be found here.

Federal Budget 2018-19 Preview for Queensland

The Federal Budget to be delivered next Tuesday evening (7.30pm AEST, 8 May 2018) is undoubtedly Treasurer Scott Morrison's most important and complex balancing act.

The Coalition is under pressure (self-imposed) to provide a ‘sugar hit’ that best positions it with a looming election but at the same time it has an expectation from bolted on conservatives and the business community to tackle the problems of competitiveness, debt and deficit.  These are the competing tensions of this Federal Budget.  

Many believe the Coalition has squandered this term in office and in short their legacy will rest on the outcome of the budget.  So here’s what we know one week out from the main event:

Fiscal Background

As part of the December Mid-Year Economic and Fiscal Outlook the Government anticipated delivering a reduced deficit in 2017-18 down from $29.4 billion in the Federal Budget (May 2017) to $23.6 billion in the MYEFO (December 2017).  If anything the revenue outlook has been even stronger since then and the Coalition is rolling in increased tax receipts courtesy of a surging economy delivering company tax windfalls and jobs growth (376,000 in the past year) boosting income tax.

Analysis suggests the Coalition will have at least $8 billion per year to either channel into the budget’s bottom line and the paying down of debt or alternatively spending it on tax cuts and infrastructure.  In respect to the 2017-18 budget deficit, this will fall to approximately $14 - $15 billion which will be the smallest deficit since the last budget surplus recorded in 2007-08.  The Treasurer has confirmed that the projected return to a balanced budget in 2020-21 is well and truly on track.

Budget Repair

However despite the progress in trimming the deficit, net debt will continue to rise and will peak at $365 billion (18.5% of GDP) with an annual interest bill of $14.5 billion.   In short we are making little inroads into a substantial pay down in debt.  The progress has been painstakingly slow and at present expenditure is still substantially exceeding revenue. The path back to surplus really hinges on maintaining strong and steady activity in the Australian economy which is no surety.

The biggest agitators for budget repair unsurprisingly come from the business community.

The Government’s should reinforce confidence in the path to fiscal sustainability.  The Government should stay the course on the proposed phase-down in the corporate tax rate over the coming decade and should use this initiative to build a program of more far-reaching tax measures that puts Australia’s tax arrangements on the more solid foundation that will become all the more important in coming years.”

AI Group Budget Submission

“ACCI calls on government (current and future) and the community it represents, to always be conscious of its legacy. That is, we must be aware of whether we are leaving future generations in a better (or worse) position to face whatever uncertainties circumstances dictate.  This leads to two questions that we must answer: Is the current level of spending (the deficit) appropriate? How will future generations benefit from our deficit spending today?”

ACCI Budget Submission.

Fixing the embedded budget deficit in my opinion should remain the highest priority otherwise we burden future generations to either higher taxes or reduced services yet ‘politics of populism’ (ie winning the next election) will trump the need to repair the budget.   Any fix is extremely difficult with over 50 per cent of the budget comprised in expenditure relating to social security, welfare and delivery of health services, no go areas for much of the community.  Substantial cuts to spending are extremely unlikely to occur as I can not see a Government taking spending cuts into an election campaign. Accordingly 'repair' will only occur on the revenue side as opposed to the expenditure side of the Budget.

Tax

What we know for sure is that the proposed 0.5 per cent increase to the Medicare levy, to help pay for the National Disability Insurance Scheme, has been scraped and will instead be paid for by higher than anticipated tax receipts.

Scott Morrison has also confirmed that the budget will be the third in a row to include provision for cutting the company tax rate, even though the Turnbull government has been unable to get the legislation through the Senate.  It is heartening to see the Government persevering with provisions under the Government’s Enterprise Tax Plan which would see a company tax rate of 25 per cent phased in over the coming decade for all businesses not just ones with a turnover less than $50 million.

In addition, the Coalition has indicated that it is seeking to cut the tax liability for middle income Australians.  Exact details are not yet known but there are a range of options on the table.  The only constraint is the competing tension with the commitment to return the budget to surplus in 2020-21 and the desire to be seen as fiscally responsible.

The $8 billion in extra money available would buy a $5000 lift in each of the top three income tax thresholds or a cut of one percentage point in each of the four tax rates.  Priority is anticipated to be placed on the 32.5 per cent rate at the $37,000 threshold.

Queensland Infrastructure

Queensland infrastructure will do very well out of this Budget due to a Coalition aiming to shore up support in key Queensland seats ahead of the election.  Twelve Queensland seats are held by a margin of less than five per cent ​and to give you an idea of where the pork barrelling may occur I have provided below a full list of these seats and the margins that they are held by each Party. Infrastructure announcements that have already been made include:

  • $500 million to protect the Great Barrier Reef from climate change and pollution;
  • $1 billion to add extra lanes to the M1 on the Gold Coast;
  • $800 million funding towards a $1 billion upgrade for the Bruce Highway between Cooroy and Curra, bypassing Gympie; and
  • Potential $300m in funding for the Brisbane metro bus project.

​ A full list of infrastructure projects worthy of consideration can also be found here.

Wrap Up

This is the very last chance in the eyes of the public for the Coalition to hold its head up high. So how should windfall tax receipts be spent?  Perhaps a better question is how will windfall tax receipts be spent?

The answer to that is unsurprising …. This has obviously not been the term of Government that the Coalition would have hoped for - from citizenship dramas to the banking royal commission and the inability to a passage much of its legislative agenda.  It has no balance accrued in the area of political goodwill.  Accordingly this will be a budget with the proven practice of sweeteners in the area of spending targeted at marginal seats and tax cuts to middle income families.

QEAS will be releasing its post Federal Budget analysis on Tuesday 8th May 2018 evening.  To subscribe please click here.

2016 Federal Election Results for Queensland

 

 

Just how competitive are our State's Payroll Tax arrangements for Queensland Businesses?

We often hear how competitive Queensland’s payroll tax regime is with politicians boasting that we have the lowest rate at 4.75% and one of the highest exemption thresholds. However our competitiveness is not as straight forward as many people think.  So just how competitive are Queensland's payroll tax arrangements?  Well the answer to that question depends on what size of business you happen to be.

I was reminded by one of Brisbane’s key businesses in responding to an earlier blog on Payroll tax that Queensland is one of only two States (WA is the other) where by we have a diminishing payroll tax exemption threshold as opposed to a flat exemption threshold like in NSW and Victoria.   What this means is that our exemption threshold reduces to zero between payrolls of $1.1 million and $5.5 million.  More specifically our $1.1 million exemption threshold phases to zero at a rate of $1 in every $4 of taxable wages above the threshold.  What this means is that businesses with taxable wages above $5.5 million in Queensland actually have no exemption threshold at all!

So what does this practically mean?  Well for smaller businesses they benefit from our higher exemption threshold and for larger businesses they benefit from our lowest payroll tax rate that makes up for the fact that they do not have exempted wages at all.  However for middle sized businesses they miss out on the benefit of an exemption threshold that places them in an uncompetitive position against interstate rivals.  The lower payroll tax rate unfortunately for these businesses is not enough to make up for this.  The trouble zone for medium sized businesses is between payrolls of $4 million and $20 million and there are approximately 5,000 businesses who find themselves in this uncompetitive zone.  To put this into perspective just a little over 20,000 businesses pay payroll tax in Queensland so about 25 per cent of these find themselves uncompetitive to businesses for example in Victoria or South Australia.

Queensland Treasurer, Andrew Fraser, diligently recognised this specific aberration in his 2008-2009 State Budget:

The Queensland Government recognises the effective marginal payroll tax rate immediately above the exemption threshold has a particular impact on the tax payable by medium sized businesses. This Budget further improves the competitiveness of Queensland’s payroll tax regime by extending the $1 million deduction such that it phases out at a rate of $1 in every $4 of taxable wages above the threshold, rather than $1 in every $3. ………….The Queensland Government has also announced a policy decision to review the rate at which the deduction phases out in subsequent Budgets.

However, since June 2008 wages have grown by 30 per cent and it is now time to review our exemption threshold arrangements because our competitiveness is compromised for medium sized businesses. We should pause and spare a thought for this often overlooked demographic of the business community.   Medium sized businesses compete against three groups: small businesses who don't pay payroll tax, large business who have the scale to offset payroll tax and international businesses who chances are don't pay payroll tax, a woeful tax on giving a person a job!

In summary if any politician tells you Queensland has the most competitive payroll tax arrangements in Australia take this with a grain of salt because for about 5,000 businesses this is simply not the case.  This is particularly relevant as we currently frame the State Budget for 2018-19.

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